Sugar War

Political upheaval, war, and a shortage of sugar were coming to France.

Eighteen sixty-eight was a terrible year to invest in champagne. The push for German unification was nearing its final, military stage; a cataclysm that would defeat two French governments in a year, leave Paris besieged and riven by factions, and result in the occupation of the country’s north for two years. Worse, in the five years (1865-1869) preceding the Franco-Prussian War, France became a net importer of sugar –a key ingredient in champagne– at a time when global sugar prices were rising dramatically. This occurred when the United Kingdom rapidly expanded protective tariffs on imported sugar in response to labor disruptions after it abolished slavery in its sugar-producing Caribbean colonies. The British trade barriers triggered similar moves globally which drove up the price of sugar. Political upheaval, war, and a shortage of sugar were coming to France.

In 1868, Madame Louise Pommery had already managed her late husband’s modest champagne business for a decade while raising their young daughter. Undeterred by the worsening environment, she acted on a grand vision to capture the global champagne market. In what would become the century’s largest construction project, Pommery excavated 18 kilometers of tunnels connecting dozens of 2000 year-old Roman chalk mines. Situated a uniform 30 meters below the surface, the tunnels are a perfect environment in which to make champagne.

“Louise” stands as a guardian and muse of the style of champagne. The beautiful sculpture is actually named after Madame Pommery’s daughter by the same name.

Driven by an understanding of the cultural and aesthetic value of champagne, Madame Pommery turned the tunnels into a living gallery of art and music and a celebration of French society. Each new market had a gallery named after it, giving that city a small, sentimental stake in the Pommery enterprise and lending a neighborhood feel to the subterranean labyrinth. Later, she commissioned artist Henry Navlet to beautify the place with bas-reliefs carved directly into the chalk. His haunting work adorns the ancient mines that anchor artistic themes in different parts of the tunnels. Modern lighting and music further enhance Navlet’s effect, and a century later Jean Barrat carved “Louise”, a masterpiece that stands as guardian, muse, and embodiment of the style and grace of champagne.

Champagne

Style and grace were far from my mind when I drove through the massive iron gates of the estate that dominates a major traffic circle in Reims. The blue donjon towers and crenellations so strongly resembled an amusement park facade that I had to remind myself the Pommery Champagne Estate is no elaborate re-creation. Situated just outside the beating heart of downtown Reims in the Champagne region of France, the garish estate is home to 20 million bottles of champagne in various stages of their early, subterranean lives.

Champagne is the end product of a complex and fascinating bio-chemical reaction that occurs when yeast becomes intoxicated on white wine and sugar. Capturing the bubbly by-product of microbial drunkenness is the art that makes champagne so unique and the reason it is made in the very bottles in which it is sold. Following a secret formula, the Chef de Cave adds these very hard-working microbes and a measured amount of sugar to a carefully crafted bottle of wine to produce the additional alcohol and carbonation that gives the drink its characteristic bubbles. This second fermentation lasts anywhere from 15 months to 80 years in Pommery’s tunnels and occurs in bottles ranging in size from the 200 mL “split” to the 9 L “Salmanazar.” Even larger bottles are available in the industry but in the 19th century they were considered a serious liability as 40 percent of the bottles in the tunnels would explode from internal pressures. Not only was this an enormous financial overhead, but larger bottles can produce lethal projectiles. This was such a concern at Pommery the Chef de Cave provided fencing masks to protect the faces of guests visiting the cellars. Happily, improvements in glass manufacturing have since made the tunnels safe and the protective masks obsolete.

During Madame Pommery’s time, champagne was served with the yeast included. Covering the bitter taste of the unsavory sediments required large amounts of sugar, up to 200 grams per liter. So much, that by 1874, this method of champagne production demanded a financially unsustainable volume of sugar. Madame Pommery was forced to innovate to solve her problem. Adopting a process called le remuage (riddling), in which the sediments are removed from the bottle without losing the gas, she was able to invent and market a brand of champagne she called Brut. Greeted initially with skepticism, Brut champagne requires as little as 6 grams of sugar per liter and is now the industry standard, accounting for the vast majority of 300 million bottles of champagne sold annually around the world.

The sediments can be seen in this bottle of champagne. The revolutionary remuage (riddling) process allowed Pommery to remove these sediments and drastically reduce the amount of costly sugar used in champagne.

Sugar

Pommery’s difficulties with sugar began well before the German invasion of France. In 1870 the French industry was relatively devoid of quality standards as French farmers emphasized quantity of beets over quality. At the same time, French sugar factories clung stubbornly to older, less efficient extraction methods that further reduced the industry’s output. By contrast, German and Austro-Hungarian farmers concentrated on feeding sugar manufacturers that preferred sweeter beets that yield more sugar per pound. These were not marginal differences. By 1873, German beets contained 150% more sugar than their French cousins and German factories produced 30% more sugar per pound of beets than French factories; a disparity that grew drastically worse by 1881.

While sweeter beets and better methods can account for rapid expansion of the German share of the global sugar market, the cause of the innovations themselves sprung from an entirely unexpected quarter. In both cases, German and Austro-Hungarian producers innovated because of the way they were taxed; more specifically, the way those taxes were calculated. Their respective governments taxed both farmers and sugar producers based on the expected output of a specific quantity of beets. Efficiency became profitable because government wardens would always be one step behind the innovations of producers. In other words, government inefficiency meant that sweeter beets and better factories were taxed at a relatively lower rate.

The opposite was true in France which levied taxes against the actual production weight of sugar instead of an estimate of the future yield of beets or of manufacturing equipment. From a governmental perspective this was a superior situation but it discouraged innovation. The stagnation continued for so long it became cultural. French beet farmers never developed an interest in the health of the sugar industry or the saccharine content of their beets because they could make just as much selling poor quality beets for animal feed as they could by selling good beets for sugar. In either case, their tax bills would be the same.

Bittersweet Convergence

Conditions in the late 1870s and early 1880s tied sugar producers together in crisis though they were affected differently depending which country they were in. By 1884, declining competitiveness in French sugar led to the imposition of subsidies. This spread to other producing nations as protective tariffs began to have an effect. When combined with increasingly efficient manufacturing processes, trade barriers caused domestic overproduction by every major European producer. The resultant glut sparked a chain reaction of aggressive marketing designed to destroy competing producers –mostly in the colonies of rivals– and eventually a collapse of the global market.

An artistic tribute to the “split”; an innovation that popularized champagne with the working class and helped Pommery weather a turbulent time.

Madame Pommery viewed the years prior to the 1884 sugar crisis as a time for boldness. It was during this period she invented Brut champagne, introduced the 200 mL “split”, and commissioned and purchased numerous works of art; an act seen by some as a ploy to reassure nervous investors about the financial integrity of the enterprise. Whatever the case, it worked. When France and its champagne industry emerged from the sugar crisis around the turn of the century, Brut champagne was considered the standard and splits had made champagne popular with a mass market. Pommery became the second largest producer of champagne in the world, a position it still holds, accounting for over 20 million bottles sold annually.

One can view the story of Louise Pommery as an example of innovating through a turbulent period but there is more to it. Though visionaries like her discovered opportunities in uncertainty, the sugar crisis of 1884 demonstrated the disturbing power of economics to affect foreign policy. In this case, the fluctuations of a single commodity market impacted trade, taxation, agriculture, and the economic and social integration of former slave colonies on a global scale. By the time the global sugar industry returned to normal, the world was on a collision course with the Great War. Pommery’s tale is thus a historical link between the Franco-Prussian war that heralded the end of the old order and the Great War that set the foundations for the new one. The challenge in our time will be to harness the predictive potential of commodity markets as indicators of future political conflict in a globalized economy. We simply cannot ignore the convergence of trends such as plummeting oil prices and events like the Arab Spring, the Russian seizure of Crimea, or Chinese military moves in the South China Sea. Like Madame Pommery, we must discover opportunity in uncertainty.

Lino Miani is a traveller and connoisseur, and is tortured by an amazing sense of taste. Until visiting Pommery, he carefully avoided learning about champagne lest he go broke drinking it.